Property Types, Valuation, and Market Analysis
Property Types
Distinguish residential (apartments, villas, townhouses), commercial (offices, retail, warehouses), industrial, land/plots, and specialised assets (hotels, staff accommodation). Each has different demand drivers, lease structures and valuation approaches. Strata units carry service-charge obligations that affect net yield.
Valuation Approaches
Know the three classic methods: sales comparison (most reliable for residential), income capitalisation (for income-producing property: value = net operating income ÷ capitalisation rate), and cost approach (replacement cost less depreciation, useful for specialised or new builds). Understand gross vs net yield, service charges, vacancy, and how a change in cap rate moves value inversely.
Market Analysis
Candidates should read supply (pipeline, handovers), demand (population, employment, tourism), absorption, vacancy, and price/rent trends. Understand that a large off-plan pipeline can suppress rents and prices on completion.
Traps
Questions often confuse gross yield (annual rent ÷ price) with net yield (after service charges and costs). Another trap: applying income capitalisation to a vacant villa with no income. Watch for cap-rate direction errors - a higher cap rate means a lower value.
Worked Example
NOI AED 120,000; cap rate 6% → value = 120,000 ÷ 0.06 = AED 2,000,000. If the cap rate rises to 8%, value falls to AED 1,500,000.